Prices for socially important food products stabilized, downward trend noted — Bakhyt Sultanov

In his report about the socio-economic development for January-July 2021, given at the government session chaired by the Prime Minister Askar Mamin, Minister of Trade and Integration Bakhyt Sultanov told about the development of domestic trade. All indicators show positive dynamics. So, the index of the physical volume of trade for January-July of this year showed 109.1%.

“Confirmation of these trends can be called the situation with e-commerce. Despite the fact that by the end of the year it was planned to bring e-commerce to 10%, today this figure has reached 12.2%,” Sultanov said.

As for the rise in prices for socially significant food products, they have grown by 10.3% since the beginning of the year. The largest growth was shown by vegetables, for which prices rise in the off-season, import-dependent products, as well as goods with high export demand. According to the current situation in the regions, the maximum growth was recorded in the Turkestan region by 12.0%, in the city of Nur-Sultan - by 11.6% and in the Karaganda region — by 11.4%.

Nevertheless, the price growth observed since April has stabilized, and the trend turned to decline. Thus, a seasonal increase in potato prices was recorded in the period from April to June. Further, as the yield of early-ripening potatoes increased in the southern regions, the prices for products decreased. Since the moment of maximum growth, prices have fallen by 26% or 54 tenge. In August and September, a massive harvest is expected in the northern regions, which will saturate the domestic market with potatoes and contribute to further price reductions.

The seasonal rise in prices for carrots lasts a month later. The market saturation with a new crop begins on average from the end of July and lasts until September. During the harvest season, a harvest of 577 thousand tons of carrots is expected. This will significantly reduce the price of carrots.

Prices for onions and cabbage are still growing. Since the beginning of the year, the price of a kilogram of onions has risen in price by 28.8% or 23 tenge. And the prices for cabbage went up by 22% or 20 tenge. According to historical data, mass harvesting of onions and cabbage begins in late August - early September.

“Accordingly, a decrease in prices is expected only at the end of this month. We analyzed the main mechanisms for stabilizing prices. The results showed that in the regional stabilization funds funds for the purchase of goods were incorrectly allocated and there are still facts of ineffective use of the mechanism. In some regions, instead of paying attention to high-risk products, goods with stable prices were purchased. For example, 37% of the funds were spent on the purchase of flour. Its price is stable with us. Also, such goods as salt and dairy products were purchased, which historically rose in price only within the limits of inflation,” added the minister of trade.

According to him, akimats need to concentrate funds on socially significant goods with high risks and volatile prices. Given that the “reverse scheme” and the forward are market mechanisms, it is necessary to make the most of these instruments. According to the data on the execution of the revenue side of local budgets, as of Aug. 1, akimats have about 633 billion tenge of free funds. That is, the required funding is only 3% of the available funds.

Also, there are additional funds in the accounts of social-entrepreneurial corporations in the amount of 6.4 billion tenge. These funds also need to be directed to the turnaround scheme and forwards.

The Ministry of Trade and Integration has launched an analytical trading platform. At the first stage, based on the data of electronic invoices and receipts of fiscal data operators, a broad analytics on domestic trade, especially socially important goods, is formed. At the second stage, together with the country's institutes and the Higher School of Economics of Russia, work is being carried out to create a system for forecasting food prices through neural networks.

“For the effective organization of this work, it is necessary to ensure the direct integration of the State Revenue Committee's databases with our analytical system by the end of this year,” Sultanov noted.

The minister also added that the following measures should be taken to prevent further price increases.

First. Akimats to strengthen monitoring and control over preventing business entities from exceeding markups and ceiling prices, as well as timely inform regional residents about the established maximum prices.

Second. Ensure clear interregional cooperation in the supply of goods between social and entrepreneurial corporations. At the same time, the Ministry of Agriculture should amend the rules allowing the stabilization funds to carry out mutual deliveries of goods.

Third. In the period from September to December, there is an increase in demand for vegetables from bordering countries. In case of uncontrolled export of products from the country, it is necessary to introduce quotas for the export of such goods.

Fourth. Given the physical and moral depletion of vegetable stores, the rate of investment subsidies must be increased from 25% to 50%. This is necessary to fulfill the instructions given by the Head of State at an expanded meeting of the Government, and will stimulate business, keep the harvest in sufficient quantities and prevent a sharp increase in prices.

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